Bloomberg Forces Disclosure of Moneypit Extent
After a legal battle with the Fed and a group of US banks, Bloomberg forced disclosure of details of the US bailout to banks under FOIP.
In all, nearly $8 trillion (considerably more than the ~$800 billion figure usually talked about) or over half of the entire US's gross domestic product of around $14 trillion at the time was given to banks with zero oversight. Congress didn't know the details until this Bloomberg article, allegedly.
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he "wasn't aware of the magnitude." It dwarfed the Treasury Department's better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
Indeed, with total US mortgage debt also around $14 trillion, those funds could have been used to slash every single US homeowners' debt in half. Instead, the pockets of a handful of bankers were lined with considerably more "collateral" (aka "other people's stuff").
Bankers didn't disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed "one of the strongest and most stable major banks in the world." He didn't say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
On the secrecy of the program (The Federal Reserve is a private corporation):
The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush's administration who managed TARP. Top aides to Paulson weren't privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren't authorized to speak.
On top of this, Paulson told his Wall Street contacts about impending government takeover of Fannie Mac/Freddie Mae (US mortgage companies).